- (1.) This is an appeal against the full bench judgment of Gujarat High court, holding the appellant purchaser of sugarcane and as such liable to pay tax under the provisions of Gujarat Sales Tax Act, 1969.
(2.) The appellant, is a CO-Operative Society registered under the Bombay CO-Operative Societies Act, 1925. Its main object is to encourage development of agricultural industries amongst its members by introducing modern methods of agriculture and by promotion of principles of CO-Operation and joint farming methods, so that members can take maximum advantage of their modern large- scale agricultural production. The appellant-Society supplies to its members seeds, manure, agricultural implements and expert advice and assistance, for production of sugarcane. Sugarcane supplied by the members are utilised by the Society at its factory for manufacturing sugar. The Society grants loans to the producer-members against sugarcane entrusted by them to the Society. The Society crushes the sugarcane and manufactures sugar and sells the same in the market, subject to such restrictions as has been laid down by the central or the State government. At the end of the season, the Society passes a resolutionfixing the rate per ton ex-field delivery for the payment to be made to its members for the supply of sugar by them. This payment is worked out in accordance with a formula on the basis of the price realised by sale of sugar by the appellant-Society. The Society makes an effort to see that the proceeds out of the sale are distributed to the maximum possible extent amongst the members.
(3.) It has been contended on behalf of the appellant that having regard to the fact that it is a Society formed by the agriculturists without any profit motive, it should not be brought under the net of taxation. The Society really helps the agriculturists to produce sugarcane in an organised and modern scientific manner and tries to provide a machinery to the farmers for selling their product. Strong reliance has been placed on a judgment of this court in the case of Khedut Sahakari Ginning and Pressing Society Ltd. v. State of Gujarat. In that case, the question of law referred by the Gujarat Sales Tax tribunal to the High court for its opinion was "whether on the facts and in the circumstances of the case, the transactions are purchases of cotton by the Society from its members -;